If you assumed that discount clothing stores like H&M and Walmart have after-holiday sales for their unsold merchandise like any other store, you'd be wrong!
It's recently been reported in the NYTimes (1/5/10) that their local H&M store and Walmart regularly destroy and discard clothing and hangers rather than sell them at lower prices or donating them to charity.
Gloves with the fingers cut off, childrens' shoes with the insteps cut, winter coats (tagged $59-$129) with the arms cut off and big slashes through the body, shirts slashed so they'd be unwearable, sturdy plastic hangers - all bagged and thrown in the trash rather than sold at deep discount or donated. Merchandise that had Walmart tags had apparently been destroyed by a machine that punches holes into the clothing to make it unwearable.
Cynthia Magnus, a student at City University of New York in Manhattan, found bags of the clothing and dragged some bags home in the hopes of finding someone who could help mend the items and then distribute them to charities.
H&M's website claims that they donate all unsold items to charity and that they are concerned for the environment. It's unclear how long this practice has been going on unreported.
H&M has since promised to stop this practice. Walmart has not commented.
It's bad enough these corporations undercut American workers every chance they get. Now apparently the tax breaks available to them if they donated these goods aren't enough incentive to help the poor. And all of this unused clothing winds up in a landfill rather than being used.
Update: Ellinorianne makes a good point. The earliest article I could find on this was written by Jim Dwyer for the NY Times on Jaunary 5, 2010.
Here's the article.